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Russian oligarch Roman Abramovich sits in a VIP lounge at Ben Gurion international airport in Tel Aviv on March 14.STRINGER/Reuters

The Canadian government says it intends to seize US$26-million belonging to a company owned by Russian billionaire Roman Abramovich, and then donate the proceeds to Ukraine to help Kyiv rebuild from Moscow’s military assault.

But legal experts say this may ensnarl Canada in a legal battle and could run afoul of a 1991 investment treaty between Russia and Canada that says assets can’t be expropriated without “prompt adequate and effective compensation.”

Foreign Affairs Minister Mélanie Joly announced Monday that Canada will seize the assets from Granite Capital Holdings Ltd., a company she said is owned by Mr. Abramovich. She said in a statement that the government is preparing a court application to “forfeit the asset permanently” to the Crown.

“The proceeds that are generated will be able to be used for the reconstruction of Ukraine and compensation to victims of the Putin regime’s illegal and unjustifiable invasion,” Ms. Joly said.

Maéva Proteau, Ms. Joly’s director of communications, said the assets are dividends in a bank account in Canada.

In a post on Twitter, Oleg Stepanov, Russia’s ambassador to Canada, called the move an attempt at “robbery in broad daylight” and said it was “proof that inviolability of private property in Canada and other Western states” had “ceased to exist.”

Canada first slapped sanctions on Mr. Abramovich in March, weeks after Russia launched a full-scale military assault on Ukraine.

The same day Ms. Joly made her announcement, The Globe and Mail reported that Canada has so far not levied sanctions on Alexei Mordashov, one of Russia’s richest oligarchs, who has strong ties to President Vladimir Putin and whose family owns a global gold-mining company that has an exploration project in Nunavut. The billionaire businessman has been blacklisted and is subject to asset freezes by the United States, the European Union and Australia.

The move on Mr. Abramovich is the first time Canada is using a new authority granted to it in a 2022 budget implementation act. The legislation gives Canada the power to forfeit or sell assets of foreigners seized under sanctions law.

“We have warned Putin and his enablers that they would not be able to hide from the consequences of their actions,” Ms. Joly said.

“As Ukrainians continue to fight valiantly to reclaim the land that is rightfully theirs, we reaffirm our commitment to stand with Ukraine for as long as it takes.”

Julia Webster, a lawyer with Baker McKenzie in Toronto, said Canada may have a legal battle on its hands for a number of reasons. It will have to prove these assets are owned, directly or indirectly, by Mr. Abramovich.

Because this is the first time Canada has attempted this, “I think it’s a bit of uncharted territory,” she said.

A person whose property is subject to seizure might challenge the seizure before the Minister. Or they could challenge the law itself before a court, on the basis that the legislation is beyond Ottawa’s jurisdiction, given the division of powers in Canada between the federal government and the provinces, she said.

Another question would be whether confiscating someone’s property in this manner represents an “unreasonable search and seizure” under the Charter of Rights and Freedoms.

Ms. Webster said seizing and forfeiting assets may undermine the purpose of sanctions, which is normally to change behaviour on the part of the target. There is no longer any incentive to change behaviour after an asset is taken away, she noted.

The foreign investment promotion and protection agreement (FIPPA) between Russia and Canada grants the investments of Russian nationals protection in Canada. The treaty calls for binding arbitration to settle disputes.

Deputy Prime Minister Chrystia Freeland said in a statement that Canada will not let wealthy Russians close to Mr. Putin to hide their money here.

“Putin’s oligarchs are complicit in Russia’s illegal and barbaric invasion of Ukraine. Canada will not be a haven for their ill-gotten gains,” she said.

Toronto trade lawyer Mark Warner predicted Canada would have difficulty linking the money to Mr. Abramovich.

“I find it hard to believe Abramovich would have assets in a Canadian bank account nine months after he was sanctioned by Canada,” he said.